SFO probe at Severn Trent widens

The water regulator has passed a second dossier to the Serious Fraud Office about false data supplied to it by Severn Trent, this time about the misreporting of customer complaints.

The water company is now open to a wider criminal investigation as well as an increased fine from the regulator, Ofwat.

Last month Ofwat found that Severn Trent had overcharged customers by £42m by incorrectly calculating levels of income and bad debt and ordered it to repay the money. The regulator warned at the time that it would also impose a fine, which may run into tens of millions of pounds. It also referred a separate issue - false data supplied by Severn Trent on leakage rates - to the SFO, which has begun an investigation.

The company admitted yesterday to new misreporting offences, stemming from a separate internal inquiry. Ofwat has launched another inquiry, as well as asking the SFO to look into the new information.

The company said: "Severn Trent believes there is prima facia evidence of customer relations data being misstated by Severn Trent Water in submissions to Ofwat. The data concerns the handling of customer-billing queries and telephone contacts over several years. Any financial implications of the gap in reporting are not yet known."

Analysts said that the company was supposed to respond to customer complaints or queries within a certain time frame or pay compensation.

A spokesman for Watervoice, a consumer organisation, said: "This matters because the data the company supplies affects the bills we all pay and the service that we get."